Tesla Has Its Best Quarterly Production And Deliveries. Can It Quintuple Them?

Tesla started 2017 with its best-ever quarterly vehicle production and delivery results, in line with the guidance given to shareholders earlier this year. While that’s a positive development, it’s a drop in the bucket compared to CEO Elon Musk’s goal of quintupling Tesla production to a half million units by 2018.

The Palo Alto, California-based company built 25,418 Model S sedans and Model X crossover vehicles in the quarter that ended March 31, Tesla said in a statement. That was slightly above its previous quarterly high of 25,185 in last year’s third quarter.

Global deliveries of Teslas, which often cost more than $100,000 each, totaled “a little bit more than 25,000,” or 69 percent better than in the first quarter of 2016, the company said. That included about 13,450 units of Model S and 11,550 of Model X. The figures issued April 2 are preliminary estimates that could vary by 0.5 percent from final results, Tesla said.

Musk raised more than $1.2 billion in a stock and debt sale last month to help fund costs related to producing the Model 3, Tesla’s first widely affordable electric car, with a promised base price of about $35,000.

Elon Musk speaks during a ceremony in Dubai in February. (KARIM SAHIB/AFP/Getty Images)

The youngest U.S. carmaker also got a vote of confidence last week when Chinese social media network giant Tencent revealed in a U.S. regulatory filing that it acquired a 5% stake in Tesla worth about $1.8 billion.

Ramping up production of the Model 3 sedan, which has a waiting list of about 400,000 people who each put down a $1,000 reservation fee, poses a considerable engineering challenge for the company. Equity analysts generally have mixed views on whether the new car will launch on schedule in the third quarter of 2017 and the likelihood of Tesla achieving an overall production rate of 500,000 vehicles per year in 2018 and 1 million annually in 2020.

Tesla is also still completing its sprawling $5 billion Gigafactory battery plant near Reno, Nevada, an essential ingredient to achieve Musk’s vision of vastly expanded production of lithium-ion cells needed for both vehicle battery packs and stationary power storage units paired with SolarCity solar panels.

Meanwhile, Musk is also pursuing grand plans for SpaceX to send humans into space next year, plotting the creation of a company dedicated to tunnel boring devices and another, Neuralink, to bolster the human brain with artificial intelligence. Oh, and he has to navigate the impact of a new U.S. administration that's pursuing federal energy and environmental policies that are antithetical to his goals of weaning the world off of carbon-based energy.

Musk isn’t afraid to set highly ambitious goals for Tesla and has a history of pushing the company hard to achieve them. Whether he can transition Tesla from a highly valued niche brand into a true mass-market automaker remains to be seen, and will unfold over the next few quarters.